The Margin Guide Broke and the Balance Sheet Healed; Only One of Those Was in the Plan

Results vs. Consensus

Quality of Beat/Miss

• Revenue: Adequate and unremarkable. Revenue of $883.8M grew 8.9% and landed inside the 8-10% guide but below its midpoint, in a quarter that was supposed to carry the displaced Sourcebook revenue out and the recovered backlog in. The two-year stack of 18% is the number management wants read, and it is the more meaningful one.
• Margins: Poor, and poorly explained in advance. Adjusted operating margin of 11.6% is 340bps below the year-ago 15.0%, and the year-ago figure itself was flattered by adding back a $19.5M impairment charge, most of it on the two German Design Galleries. Gross margin of 44.1% contracted 40bps and SG&A deleveraged 10bps: neither line worked. Management attributed the shortfall to tariff expense on prior-period special and back orders delivered in the quarter and to Paris opening costs above plan.
• EPS: The GAAP and adjusted lines point in opposite directions and the adjusted line is the honest one. GAAP diluted EPS rose 10.2% to $1.83, helped by a $3.375M contract termination settlement gain that adjusted EPS correctly excludes. Adjusted net income of $34.0M fell 31.2% from $49.3M. Interest expense of $57.2M was again essentially unchanged year over year.

Year-over-Year Comparison

Sequential Comparison

Assessment: The sequential picture is the quarter in miniature: 350bps of adjusted margin gone in three months while the balance sheet improved on every line. Some of the margin decline is seasonal, because Q3 carries the Sourcebook mailing expense and Q2 does not. Most of it is not: the tariff catch-up on previously written orders and the Paris cost overrun are both real reductions in earning power, and the first of those is a direct consequence of having written demand at pre-tariff prices.

Segment and Regional Performance

RH does not report segment financials. The disclosed operating detail is again channel and regional color from the shareholder letter and the call; the consolidated revenue line is the income-statement figure.

North America core

The domestic business grew through the quarter that was supposed to be structurally penalized. Management framed the share-gain argument more aggressively than in prior quarters, publishing a comparison against national furniture-based peers and asserting two-year share gains ranging from 12 to 28 points, while attributing a meaningful portion of the gains to fragmented to-the-trade design showrooms, regional high-end furniture stores and local independents. On the call, management sized the historical attrition anecdotally, describing a local market where independent high-end boutiques went from roughly 32 to 18 or 20 over a period of years.

Assessment: The share argument is credible and it is also the argument a company makes when the margin line is indefensible. Growing 8.9% into a category that is contracting is genuinely valuable; it is not a substitute for the 340bps of adjusted margin that went missing.

Europe

Paris is the one line in the quarter that improved against our September read. Management disclosed a specific ramp figure rather than an opening-week traffic anecdote, and separately conceded a series of operational shortfalls: the design team was overwhelmed by traffic, restaurant staffing required flying employees in from the United States, and the rooftop, which was the highest-grossing part of the restaurant operation, is closed for the winter because the space cannot be evacuated quickly enough in rain.

"the six weeks the average per week is 62% higher than the first eight weeks. And the first eight weeks actually had more traffic" — Gary Friedman, Chairman and CEO

The Milan and London designs are being revised in light of what Paris taught, including adding an architecture and design library to the Milan entry and a World of RH space. Management also began testing an events business in the Galleries, having previously refused it for years.

Assessment: A demand ramp that accelerates while traffic declines is the right shape: it means conversion is improving rather than novelty fading. This is the first genuinely quantified European datapoint we have received, and it moves the European pillar from a story to a measurement. It does not change the cost profile, and Paris opening expense above plan was one of the two named causes of the margin miss.

Hospitality

Management used the quarter to argue that hospitality is a core competency rather than an amenity, noting the tenth anniversary of the restaurant business, that RH operates its restaurants itself rather than licensing a chef's name, and that restaurant contribution offsets a meaningful share of building rent. It cited a Chicago restaurant that opened at $5M in its first year against an internal estimate of about $1M and now runs just under $10M, with a second location in a nearby suburb at $11M.

Assessment: These are real numbers and they are anecdotes, disclosed selectively and never in a reported line. Hospitality is plainly working at the unit level. Until it appears as a disclosed revenue and margin stream, it cannot carry weight in a model, and the Paris cost overrun is a reminder that hospitality is also where the operating surprises live.

Key Topics & Management Commentary

Overall Management Tone: Defiant rather than defensive, and noticeably less quantitative than last quarter. The prepared letter pre-empted the margin miss in its second paragraph and then pivoted to a market-share argument and an explicit complaint about how the market rewards low expectations, which set the register for a Q&A in which management repeatedly declined to convert enthusiasm into numbers. The most convincing passages were on the balance sheet, where the CFO gave specific, checkable figures; the least convincing were on fiscal 2026, which management deferred to March.

The Margin Miss and Its Two Named Causes

Management led the letter with the shortfall rather than burying it, attributing the 11.6% adjusted operating margin against a 12.5% guidance midpoint to higher-than-forecast tariff expense on prior-period special order and back order sales delivered in the quarter, and to higher-than-expected Paris opening expenses.

"Adjusted operating margin of 11.6% was below the 12.5% mid-point of our guidance due to higher than forecasted tariff expense on prior period special order and back order sales delivered in the quarter and higher than expected Paris opening expenses." — Gary Friedman, Chairman and CEO

The first cause is the direct cost of the backlog we flagged in September. Orders written before tariff rates moved ship at a cost basis set afterwards, and the CFO was explicit that the company cannot retroactively reprice a customer's completed order.

Assessment: This is the demand-to-revenue wedge converting exactly as we warned it would: the revenue arrives and the margin does not. It confirms the bear point we opened at Emerging and moves it to Materializing. The mitigating detail is that the effect is mechanical and self-liquidating once the pre-tariff backlog clears, which the CFO indicated will flow a little further into Q4.

The Full-Year Margin Guide Reset

Fiscal 2025 adjusted operating margin is now guided to 11.6-11.9%, against 13.0-14.0% three months ago and 14.0-15.0% in June. Adjusted EBITDA margin follows to 17.6-18.0% from 19.0-20.0%. On the revenue base implied by the 9.0-9.2% growth guide, that is roughly $50-70M of adjusted operating income removed from the year in a single quarter's revision.

Free cash flow of $250-300M was maintained, and the Q4 frame of 7-8% revenue growth with 12.5-13.5% adjusted operating margin is internally consistent with the full-year numbers.

Assessment: The credibility cost is larger than the dollar cost. A margin frame that has moved 14-15%, then 13-14%, then 11.6-11.9% inside nine months is not a guide; it is a running commentary. Holding free cash flow while cutting margin tells you the working-capital release is doing the work that the P&L was supposed to do, which is fine for the balance sheet and hollow for the earnings power.

Deleveraging Actually Happened

This is where the quarter delivered. Net debt of $2.427B was down $85M sequentially. The asset-based facility was drawn at $65M against $135M at Q2 and $200M at fiscal year-end. Cash rose to $43.1M. Merchandise inventories fell to $874.9M, down $82M sequentially and 11% year over year, against a stated ~$300M excess position. Stockholders' equity turned positive at $3.3M, from a $40.9M deficit at Q2 and a $163.6M deficit at fiscal year-end.

"Net debt at the end of the quarter was $2.427 billion, down $85M from Q2." — Gary Friedman, Chairman and CEO

Assessment: Net debt, revolver drawings and inventory all moved the right way, on schedule, without a capital raise. This is the reason the rating does not move down despite a margin guide that would otherwise force it. It is worth being precise about what improved: the deleveraging is funded by working capital, not by earnings, and working capital is a finite source.

Pricing Elasticity After the Increases

Asked how customers responded to the price increases taken during the year, management said it is still learning, framed the tariff environment as continuously moving, and shifted to a complaint about competitors it believes are evading duties by importing under-invoiced goods through United States entities.

"We've taken a lot of price increases this year. We've got a lot of you know, movement in tariffs and tariffs are set at one level, and they went up." — Gary Friedman, Chairman and CEO

Assessment: No elasticity data was provided, which is a meaningful omission in a quarter where revenue grew 8.9% partly on price. If unit demand is flat and revenue growth is price, the share-gain argument weakens considerably. Management was asked and did not answer.

The Spring 2026 Collection and the Michael Taylor Acquisition

The brand extension acquired a name on this call. Management disclosed, apparently unplanned, that RH has bought Michael Taylor Designs and owns all of the associated intellectual property, and that a further acquisition has also been completed. The collection targets what management describes as the architectural style of roughly 60% of homes valued at $5M and above, and will launch at Salone in Milan.

"I think this is gonna be the biggest incremental move we've ever made." — Gary Friedman, Chairman and CEO

Management also reframed the size of the opportunity from the "$2 billion idea" language of September to a longer-dated formulation.

"it's worth a few billion dollars over the next several years, you know, And it's five years or ten years" — Gary Friedman, Chairman and CEO

Assessment: The disclosure is a genuine improvement over last quarter's unnamed concept, and the strategic logic is sound: RH is buying design heritage for a style cycle it believes is turning. The financial framing moved the other way, from a specific number to a range spread over five to ten years. Both acquisitions were undisclosed until this call, and neither was sized.

Capital Structure Options and the Refinancing Question

Management addressed the debt more directly than in September, listing the levers available: convertible notes, refinancing, real estate monetization and inventory conversion, with a characteristically personal framing of the risk.

"at some point, you know, we might tap the convert market. Some point, we may refinance some of the debt" — Gary Friedman, Chairman and CEO

Assessment: Naming the convertible market as a live option is new information and it is double-edged. It signals that management sees a path to lowering the interest bill; it also signals that the path may run through issuing equity-linked paper at a share price down more than 60% year to date. That would be a materially worse outcome for existing holders than the inventory-funded deleveraging currently underway.

Guidance Philosophy Under Direct Challenge

The letter contained an unusual editorial aside about market structure, and the Q&A tested it directly by asking whether slowing the pace of initiatives would buy predictability and profitability. Management rejected the premise and defended the strategy of investing through the downturn.

"sometimes, you know, like, in good markets, you know, we're eating quarters and making quarters. In a market like this, This is the time to you know, make moves and take market share and you know, create real strategic separation on the other side of it." — Gary Friedman, Chairman and CEO

Assessment: The argument is coherent and it is the correct argument for a private company. For a public company carrying $2.4B of net debt, guidance is not a vanity exercise; it is how lenders and equity holders price the risk of the investment program. Setting ambitious guidance and missing it repeatedly raises the cost of the capital that funds the ambition.

Fiscal 2026 Deferred

Asked whether the Q4 frame implies continued tariff absorption into next year, the CFO declined to extend the analysis, saying the situation remains dynamic and that fiscal 2026 would be addressed at the March report.

Assessment: Defensible in isolation and awkward in context, because fiscal 2026 already carries four disclosed commitments: London, Milan, the Michael Taylor collection launch with its three dedicated Galleries, and a capex envelope guided to $200-250M. Investors are being asked to hold a stock through a quarter in which the only guided number for next year is a spending figure.

Guidance & Outlook

The revenue guide narrowing to 9.0-9.2% is effectively a confirmation, not a cut: the prior 9-11% range simply collapsed to its floor. The margin guide is the real revision, and its two components are disclosed: international expansion drag of roughly 210bps for the year and tariff impact of 90bps net of mitigation, with the Q4 tariff drag guided at 170bps against 120bps assumed for Q3.

Implied Q-over-Q ramp: On the fiscal 2024 base of $3,180.8M, the 9.0-9.2% guide implies $3,467M to $3,473M. With $2,596.9M reported through nine months, Q4 must deliver $870M to $876M against $812.4M a year ago, or 7.1% to 7.9% growth, which matches the 7-8% quarterly guide. On margin, the 11.6-11.9% full-year frame implies roughly $402M to $413M of adjusted operating income against $294.9M booked through nine months, leaving Q4 at $107M to $118M, or 12.3% to 13.6%. That is consistent with the 12.5-13.5% quarterly guide and requires no heroics.

Street at: Consensus stood at $2.13 in adjusted EPS against $1.71 delivered, and had been working from the September margin frame. The reset removes roughly $50-70M of expected full-year adjusted operating income and mechanically resets the fiscal 2026 earnings base from which Street models start.

Guidance style: Aspirational and repeatedly reset. Management said as much in the letter, observing that the market rewards companies that set low expectations and slightly beat them while RH sets high ones and at times misses. That is an accurate description of the market and an inadequate defense of a margin frame that has moved twice in six months.

Analyst Q&A Highlights

Note on attribution: the published transcript for this call carries swapped speaker labels across several exchanges. Attributions below were resolved from the content of each response.

How the Paris demand book is building and what it implies for London and Milan

The opening question sought a read on the Paris demand curve and how it is reshaping expectations for the two Galleries opening next spring. Management gave an extended answer that eventually produced the quarter's most useful European datapoint, along with a candid list of the operational problems the opening exposed.

Q: "Gary, you obviously mentioned RH Paris, but curious if you can maybe give us some color on how the demand book is building. Noting it's early. And the reason I asked is just curious if you can maybe help inform us how RH Paris has influenced your pro forma expectations ahead of RH Milan and RH London?"
— Steven Forbes, Guggenheim Securities

A: "when you look at the demand on the core business, and we haven't seen ramps like this. The the six weeks the average per week is 62% higher than the first eight weeks."
— Gary Friedman, Chairman and CEO

Assessment: The single most valuable disclosure of the call, and it arrived unprompted at the end of a long answer. A conversion-driven ramp against declining traffic is the pattern you want in a new luxury market. The same answer disclosed that the design team was overwhelmed and that restaurant staff had to be flown in, which is where the opening cost overrun came from.

Price elasticity after a year of increases

A question sought the customer's response to the price increases taken through the year and whether further increases are possible. Management acknowledged taking many increases, described the environment as still in motion, and redirected to competitors it believes are under-declaring import values, without offering elasticity data.

Q: "Can you just talk about how the customer responded in 3Q and the elasticity that you're seeing from the higher price points? What are the learnings, and how are you thinking about the right price points for the brand ahead? And depending on where tariffs go, could we actually see our continue to take prices further?"
— Max Rakhlenko, TD Cowen

A: "Yeah. We're know, we're learning. We've taken a lot of price increases this year."
— Gary Friedman, Chairman and CEO

Assessment: A direct question about the composition of revenue growth, answered with a description of the tariff process. Without unit or ticket disclosure, an 8.9% revenue increase in a year of significant price increases cannot be decomposed, and the share-gain narrative depends on that decomposition.

The spring collection, its timing and its economics

A follow-up sought detail on the new collection and how to size it as a fiscal 2026 building block. The answer produced the unplanned disclosure of the Michael Taylor acquisition and a target of 60% of homes above $5M, alongside a longer and vaguer revenue framing than the one given in September.

Q: "just any more color on the new, collection that you're looking to roll out next year? Just how are you thinking about the timing And just what could it look like as we think about some of the building blocks for next year?"
— Max Rakhlenko, TD Cowen

A: "we bought the Michael Taylor brand. We own all the IP, and, you know, you'll see a fresh only thing coming."
— Gary Friedman, Chairman and CEO

Assessment: Learning about two completed acquisitions from an unscripted aside on an earnings call is a disclosure-quality problem regardless of how good the strategy is. Neither transaction was sized, and both land in a fiscal 2026 that already carries London, Milan and three new-concept Galleries.

Whether to slow the pace of initiatives in exchange for predictability

The most substantive challenge of the call asked whether moderating the investment pace would deliver both stability and profitability, or whether the operating theory is growth first and margin later. Management rejected the framing at length, defending investment through the downturn as the whole point.

Q: "Would it make sense to slow the pace of all the initiatives and aim for a little bit more predictability in light of this very dynamic environment And in that case, profitability might come a little higher as a result?"
— Michael Lasser, UBS

A: "sometimes, you know, like, in good markets, you know, we're eating quarters and making quarters. In a market like this, This is the time to you know, make moves and take market share and you know, create real strategic separation on the other side of it."
— Gary Friedman, Chairman and CEO

Assessment: Management answered the strategy question and skipped the capital question underneath it. Investing through a downturn is far easier to defend at two turns of leverage than at more than three, and the questioner was pointing at the balance sheet, not at the ambition.

Whether tariff absorption carries into fiscal 2026

A follow-up asked whether the Q4 guide signals that the company is running out of room to offset tariffs with price, and whether models should assume absorption continues next year. The CFO explained the mechanical timing problem behind the Q3 miss and then declined to extend it into fiscal 2026.

Q: "Is this a signal that you're running into... limitations on being able to manage the tariffs with with price and and and we should consider that as we factor our models for next year."
— Michael Lasser, UBS

A: "you're not gonna call your customers back and say, oh, by the way, the thing you just bought we're gonna be importing it at a 20% tariff. So can you give us more money?"
— Jack Preston, CFO

Assessment: The clearest explanation anyone has given of why the backlog is a margin liability rather than a revenue asset, and it confirms the mechanism will persist into Q4. Declining to extend it into fiscal 2026 leaves the single most important modeling assumption unanswered until March.

Whether free cash flow stays positive from here

A question paired the demand backdrop with a request for a durable free cash flow commitment. Management gave a qualified affirmative, prefaced by an unusually long digression on geopolitical risk, and the CFO then supplied the specific building blocks.

Q: "barring anything in the backdrop getting worse, can we assume that free cash flow stays positive from here on out?"
— Simeon Gutman, Morgan Stanley

A: "talked about the 300,000,000 of of inventory coming down so that this year is a kind of a 200,000,000 figure we talked about. So there's still that element to come. There's we talked about reduction in cap cap capital spending"
— Jack Preston, CFO

Assessment: The CFO's answer is the more useful half and it is also the more revealing: the free cash flow bridge is inventory release plus capex reduction, not operating margin. That is a perfectly good way to pay down debt for two years, and it is not a durable free cash flow engine.

Where the market share is actually coming from

A closing question probed the unlisted portion of the share-gain claim, noting that the public comparisons in the letter are checkable while the fragmented independent and to-the-trade channel is not. Management offered a historical anecdote rather than a measurement.

Q: "it's easy for us to track the public players you outlined in the table, but less easy for us to assess, you know, the health of the the fragmented design showrooms. You know, those regional high end stores, some of the local independent boutiques."
— Jonathan Matuszewski, Jefferies

A: "we know you know, that it went from, like, 32 to about 18 or 20. You know, over x number of years, and she got do the math again."
— Gary Friedman, Chairman and CEO

Assessment: An honest non-answer. Management concedes the fragmented channel cannot be measured, which means the portion of the share-gain claim that carries the most weight in the story is the portion that cannot be verified.

What They're NOT Saying

1. No fiscal 2026 framework of any kind: Deferred to March, in a year that already carries London, Milan, a new-brand launch with three Galleries, two completed acquisitions and $200-250M of capex. The only fiscal 2026 number investors have is a spending number.
2. No price-versus-unit decomposition: Revenue grew 8.9% in a year of repeated price increases, and management declined to say how much of that growth was price. The share-gain argument depends entirely on the answer.
3. Neither acquisition was sized: Michael Taylor Designs and a second, unnamed company were both disclosed conversationally and neither purchase price, revenue contribution nor integration cost was given.
4. Demand growth was not disclosed this quarter: Last quarter's headline was demand up 13.7% against revenue up 8.4%. This quarter the letter leads with revenue and two-year revenue, and the demand figure is absent. That is a conspicuous omission given the wedge was the load-bearing assumption of the prior guide.
5. No European revenue line, still: A weekly ramp percentage for one Gallery is the entirety of the disclosure five Galleries and one flagship into the program, against a quantified 210bps of margin drag.
6. The convertible option was floated without terms: Management named the convert market as a possible avenue at a share price down more than 60% year to date, with no indication of size, timing or the conditions that would trigger it.
7. No explanation of the gross margin decline separate from tariffs: Gross margin fell 40bps year over year. Tariffs on backlog explain part of it. Mix, promotional depth and hospitality cost were not addressed.

Market Reaction

• Pre-print setup: RH closed at $153.31 on December 11, down 61.0% year to date against the S&P 500's +17.3%, down 61.6% over the trailing twelve months and down 5.5% over the trailing thirty days. The pre-print 52-week closing range was $139.54 to $454.52, placing the stock roughly 10% above its own 52-week low.
• Next-day session: Shares gapped up to open at $161.75, a 5.5% advance, traded a $158.00 to $173.78 range, and closed at $162.01, up 5.7% or $8.70. The S&P 500 fell 1.1% on the same session.
• Volume: 3.6M shares against a 0.9M share thirty-day average, 4.0 times normal. The intraday high of $173.78 was 13.4% above the prior close, so the session gave back roughly half of its peak advance.

A stock that rises 5.7% on a 20% EPS miss and a ~175bps margin guide cut is telling you that the print was not the variable being repriced. What moved was the solvency question. Net debt down $85M, the revolver drawn at $65M rather than $200M, inventory down 11%, equity back above zero and free cash flow tracking to plan collectively removed the tail scenario that had taken the stock down 61% year to date. On the day, RH outperformed a market that fell 1.1% by nearly seven points.

The fade from the $173.78 intraday high is the more instructive half of the session. The bid was for the balance sheet; the fade was the margin guide being read carefully. That is a market pricing survival more highly than earnings, which is rational at 61% down and is also a low bar. The stock can rally on relief for one or two quarters. It cannot re-rate until the margin frame stops moving.

Street Perspective

Debate: Is the margin reset cyclical or structural?

Bull view: The Q3 miss has two named, mechanical causes. Tariff catch-up on pre-priced backlog self-liquidates as that backlog clears, and Paris opening costs are non-recurring by definition. Normalize both and the underlying margin is close to where it was.

Bear view: The full-year frame has moved from 14-15% to 11.6-11.9% in six months, and each revision has been explained by a different one-off. At some point the pattern is the signal, and the 210bps international drag that does not ease next year is structural by management's own account.

Our take: The bull explanation is correct about Q3 specifically and the bear is correct about the trajectory. The tariff catch-up genuinely is timing. What it obscures is that the European drag widened, the Q4 tariff assumption rose from 120bps to 170bps, and gross margin declined. Structural is winning on the evidence available.

Debate: Does the balance sheet improvement change the risk profile?

Bull view: Net debt fell $85M, the revolver is nearly repaid, equity is positive again and free cash flow is tracking to a $250-300M year with roughly $100M of inventory release still to come plus a large capex step-down next year. The distress case is off the table.

Bear view: Deleveraging funded by inventory liquidation is a one-time source, and management has now named the convertible market as an option, at a share price down more than 60%. Interest expense has fallen 0.8% year over year. Nothing structural about the fixed charge has changed.

Our take: Both are true and the bull case wins on the twelve-month horizon that matters for the rating. Removing tail risk is worth more to this equity right now than a point of margin, and the inventory source has at least another year in it. The convert comment is the thing to watch, not the leverage ratio.

Debate: Is fiscal 2026 an investment year or an over-commitment?

Bull view: London, Milan, the Michael Taylor collection and three new-concept Galleries land in the same year as a capex step-down to $200-250M, because the newer formats cost roughly half as much to build. This is the year the platform investments start converting to revenue.

Bear view: Four major initiatives at once, two unannounced acquisitions, no fiscal 2026 guidance, and a European drag management has already said will not ease. The company has missed the margin guide in the last two quarters it set one; there is no reason to expect the most complex year in its history to be the one it plans accurately.

Our take: The bear framing is the right prior and the March report is the resolution point. We would rather own this after the fiscal 2026 guide than before it, which is precisely why this is a Hold and not an Outperform despite a stock down 61% on the year.

Model Update Needed

Valuation impact: At the $162.01 close on 19.8M diluted shares, equity value is roughly $3.2B and enterprise value approximately $5.6B against management's stated $2.427B of net debt, before finance leases. On the midpoint of the revised adjusted EBITDA margin guide applied to the revenue guide, that is roughly 9 times fiscal 2025 adjusted EBITDA with net leverage near 3.9 times on the reduced margin base. The multiple compressed and the leverage ratio rose, because the denominator fell faster than the debt did. That is the arithmetic cost of a margin guide cut at this level of gearing, and it is why we treat further margin revisions as a rating event rather than an estimate revision.

Thesis Scorecard Post-Earnings

Overall: The thesis split in two this quarter. The balance-sheet half strengthened materially and faster than we expected; the earnings-power half weakened materially and in the exact way we identified as the risk. Bull 2 moves from On Track to At Risk and Bear 3 from Emerging to Materializing, while Bear 1 improves from Materializing to Contained. Bull 3 stays At Risk with better evidence on both sides of the ledger.

Action: Hold. We flagged a further guidance revision as a downgrade trigger and we are declining to act on it, because the deleveraging we said we would watch came through and the equity has absorbed a 26% decline since initiation. We would move to Outperform on a fiscal 2026 guide in March that holds adjusted operating margin at or above the fiscal 2025 exit rate while funding the four announced initiatives. We would move to Underperform on a fiscal 2026 margin guide below fiscal 2025, on any convertible or equity-linked issuance at these levels, or on a fourth consecutive quarter of margin guidance moving down.